The truth about inflation and other world market themes for the week ahead

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What investors will be watching over the next seven days

Inflation is in the driving seat for markets already taking a punt on when central banks will start to cut borrowing rates.

After rising to multi-decade highs last year, inflation has come in below expectations for three straight months, given the Fed’s most aggressive rate-hiking campaign since the 1980s.Stock markets are confident that the Fed can bring down inflation without triggering a sharp growth slowdown. The yen strengthened on the report, a curve ball to markets betting on Amamiya, known as “Mr. BOJ” for driving unconventional monetary policies, to take over.Markets are watching closely. After all, at stake is the future of an ultra-loose monetary policy, which many suspect is likely to shift as inflation moves higher.An investor sits in front of a board showing stock information at a brokerage office in Beijing, China, Dec. 7, 2018.A strident U.S.

U.S.-China tensions are not new, but they have become fraught since former White House speaker Nancy Pelosi visited Taiwan last year. And almost a year on since Russia invaded Ukraine, investors know not to ignore geopolitical risks.Dominic Lipinski/The Associated PressJanuary’s inflation report on Wednesday could show double-digit price rises, meaning no respite yet on the interest-rate front.

With grocery price inflation at nearly 17% and energy bills tipped to rise 20% this year, food and heating may be where any spare cash is going - not a good sign for the only G7 economy the IMF expects to shrink this year.People stand on the rubble of damaged buildings, in the aftermath of an earthquake, in rebel-held town of Jandaris, Syria February 9, 2023.

 

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